Stocks Bullish in Iraq Market; Just Don't Ask Why
By JOHN F. BURNS
BAGHDAD, Iraq, Dec. 17 â In his jacket of finely tailored herring-bone tweed, his highly polished brogues and the 1930's opera glasses he carries around his neck in inlaid Chinese cloisonné, Abu Zaki is, by his own jaunty reckoning, the breeziest boulevardier of the Baghdad bourse.
Fellow denizens of Iraq's only Stock Exchange say Abu Zaki, a 72-year-old investor, elevates the dingy former customs clearing-house by his elegant presence, along with the sage "picks" he makes among the stocks, and his ebullient talk of times gone by. In the unforgiving land of Saddam Hussein, he is a walking reminder of a gentler Baghdad, and of a time when finesse still counted, before all Iraqis learned to live in fear of Mr. Hussein's secret police.
To Abu Zaki â he prefers the nickname to his real name, Akram Hussam â the epitome of good times was the 1950's. That was when he was a rising young man in Iraq's last royal government, before King Faisal II was assassinated by army rebels in 1958, his body dragged through the streets. In America, visited so often by Abu Zaki that he considers it his home away from home, it was the time of the man he still calls Ike.
"The secret? Taking it easy," Abu Zaki, a retired merchant, said in impeccable English as he chatted with his broker before heading off for lunch at the once-grand men's club on Sadoun Street where he invites cronies for afternoons of dominoes and backgammon.
On that particular day, Saturday, he was yet more chipper than usual. The last month has been a bullish one. The Baghdad Stock Index, or B.S.I., as it is known even among investors who speak no English, rose sharply, its gain on the year surging to more than 50 percent. Just about the best day was Nov. 9, when the share volume traded, 66 million, was up 65 percent on the previous close. The trading value, at 3.5 billion Iraqi dinars, or $1.7 million, was up 94 percent.
But hold on a minute, an outsider might think. Wasn't Nov. 9 the day after the United Nations Security Council passed, at American insistence, a tough new weapons inspection mandate requiring Iraq to accept an intrusive foreign presence? Wasn't the resolution denounced by the government, before it accepted it, as an American bid to "humiliate" Iraq and saturate it with "spies"?
It was.
So what is behind such a spectacular market rise? On this, men like Abu Zaki are cautious, citing many factors. Oil prices, crucial to Iraq's economy, have been strong. The central bank cut interest rates early in the month. Mr. Hussein signed a law opening up all of the economy, except the nationalized oil sector, to investors from across the Arab world.
But what nobody here will acknowledge, at least not in so many words, is that the American action in pushing through the new weapons inspection resolution may have been the most important spur. For any Iraqi to say so clearly would be to suggest that he saw, in President Bush's threats of war, a development from which to take heart â and that could be a life-threatening thought.
So Abu Zaki and his friends aim off a little, as Iraqis do whenever the subject turns to Mr. Hussein, their iron-fisted ruler for 23 years. They search for ways of suggesting what is in their hearts without exposing themselves, because the mukhabarat, Mr. Hussein's secret police enforcers, are so pervasive that even old friends, when talking politics, must speak in codes.
What had driven November's bull market, Abu Zaki said, was that Iraqis had discovered "underlying asset value" in everything from the dismal, concrete-block hotels in Baghdad that have been empty for years, to fisheries on the Tigris and Euphrates that sell their catch at rock-bottom prices â just the sort of businesses that might boom if Iraq found itself under a government that ended its estrangement.
Others found other formulations. "People think that six months from now, the situation in Iraq could be much better," said Nerses Artin Ardzivian, the 62-year-old dean of the brokers. Then, as if to be sure he would not be thought to imply disloyalty to Mr. Hussein, he offered a just-in-time correction. "Six months from now, we'll know so much more than we know right now.
It is, of course, possible that investors now crowding the exchange see the United Nations' renewed search for banned weapons as a way for Iraq, and Mr. Hussein, to escape the economic cul-de-sac in which it has been trapped for two decades of sanctions and war. If inspectors and outside intelligence turn up nothing, the country and its ruler could be free of the inspections, and of sanctions, as early as next fall.
But there is another, startling possibility: That the men and women now plunging their savings into shares in hotels and restaurants, farms and fisheries, banks and insurance companies, have glimpsed a different Iraq, one without Mr. Hussein, under the sway of the United States after another defeat at America's hand.
For November, the Baghdad exchange's "blue book," published in staple-bound soft copy at the end of each month, reads like a guide to counterculture economics: agriculture, up 13.5 percent; industrials, up 17 percent; banks, up 21 percent; services, including hotels and tourism, up 28 percent. Overall, a 25.4 percent rise in the index, the best one-month surge in years.
For the exchange, founded in 1992 as Mr. Hussein's government began to privatize much that was nationalized after the assassination of King Faisal, it has been the perfect start to its second decade.
Subhi al-Azawi, the Finance Ministry official whom the government made the exchange's director general, has just returned from Amman, capital of neighboring Jordan, with plans to computerize trading and give Baghdad an exchange commensurate with Mr. Hussein's ambitions to be unchallenged leader of the Arab world. As matters stand, computers seem an age away; all the wall clocks seem to have stopped years ago, and TV sets on the trading floor play old speeches by Mr. Hussein.
"We intend to construct an economy that surpasses the West's," Mr. Azawi said.
The exchange director, with pinstripe suit and a paint-splashed tie straight from the closet of a Wall Street high-flier, had his own explanation for the market's surge. "The people of Iraq have a tremendous confidence in their government, and the market's rise only reflects this," he said.
Downstairs on the trading floor, reality is seen through a different prism. If truth has been an elusive commodity in Mr. Hussein's Iraq, it has found a home of sorts on either side of the black wrought-iron fence that runs across the old customs warehouse. Here, with investors on one side and brokers on the other, the way the prices flow reflects as keen a sense of reality as Iraqis can muster in the Stalinist system of censorship imposed by Mr. Hussein.
"To prosper here," Mr. Ardzivian counseled, "you have to come every day, have good information, ask a lot of questions, and keep your eyes and ears open. You cannot afford to substitute hope for fact, or ambition for reality."
The results are registered in the bids to sell or buy that are posted manually, in marker pen, on white plastic boards dedicated to each of the 115 listed Iraqi companies. Investors range from cosmopolitan dandies like Abu Zaki to wizened old men from the bazaars. One accomplishment Mr. Hussein can fairly claim is that he has encouraged the emancipation of women, and the exchange has a strong minority of female traders and investors.
On Saturday, when the market fell back under heavy profit-taking, some companies were riding high, and Abu Zaki consolidated some of his earlier gains. As he paused to tally his profits, he was asked if he intended, at his club, to raise a glass â something else permitted in Iraq that is forbidden in many Arab lands. "No, certainly not," he said. "If I celebrated every time I make money, I'd be celebrating all the time."
http://www.nytimes.com/2002/12/18/international/middleeast/18BAGH.html
